Fed to Banks: Quit Stalling on Short Sales

If you're a homeowner nearing foreclosure, you may think a short sale offers a good option. With a short sale, the bank agrees to accept less than the amount owed and forgive the rest of the money due. This can be a win-win situation: The seller gets out of a jam without a foreclosure on his or her record, and the bank reduces costs because it doesn't have to spend money on the foreclosure process --as long as the bank gets a reasonable offer on the house.

That's where the problems start. What is a reasonable offer? For banks, the bar seems to be high. Banks have been dragging their feet, often for several months, after receiving an offer in the hopes of a better one coming along. In a typical scenario, the buyer gets frustrated waiting and finds another deal. The homeowner finally faces foreclosure, even though a short sale was possible had the bank acted more quickly.